Saturday, September 23, 2017

Saturday Morning Musings - untangling Brexit

On 30 April 2017 I briefly discussed Brexit and the EU, revisiting the question on 22 June. On 30 April, the EU had just released its negotiating guidelines, rejecting the UK desire for parallel negotiations. There was a lot of background chatter about EU problems, about the UK's internal problems.  My feeling was that the actual outcome of Brexit would fall between the worst and best case scenarios, resulting in a somewhat stronger EU, a somewhat diminished UK.

By 22 June there had been that UK election (9 June) that UK Prime Minister Theresa May almost lost. Within Europe, the anti-EU forces had weakened somewhat with the election of Emmanuel Macron as President (7 May 2017), while Angela Merkel's position in Germany was strengthening as was the EU economy. Initial Brexit negotiations had begun, with the EU sticking to its negotiating line.My feeling was that the initial negotiations suggested that in practice the UK will have little choice but to follow the EU agenda, although I although suspected that there was some scope for flexibility. My conclusion of a strengthened EU with a somewhat diminished UK remained the same.

Since 22 June, the Eurozone economy has continued to strengthen, as has Angela Merkel's position in Germany. The German elections are tomorrow. I am reluctant to make a forecast, but it does appear like business as usual in Germany. In France, President Macron has begun to implement reforms designed to strengthen the French economy.  Discussions about EU reforms continue, although no-one doubts the problems.

Now British PM May has announced the UK Government's latest stance on the Brexit negotiations. While details are still sketchy and will need to be worked out in negotiations, PM May's position seeks a two year transition period after formal Brexit, offering concessions in return. From my superficial scan, I thought that the basic structure was credible.

You simply can't untangle something as complex as Brexit without time and considerable compromises,. this is fundamental constitutional and economic change, but so far so good. In fact, a little better than I expected.


The German elections appear to have returned Angela Merkel to power, although the CDU-CSU and SPD polled worse than expected, the AfD (The Alternative für Deutschland) better than expected, based upon pre-election polling. It should therefore be business as usual subject to coalition discussions, although the various parties involved will need to decide how to respond to the dissatisfaction revealed by the vote, especially in the east.  

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